John Hansen as Cyrano and Elaina Erika Davis as Roxanne, share a moment inside the bakery, scene two. San Jose Repertory Theater with their production of "CYRANO".

Photo: Michael Macor, SFC

John Hansen as Cyrano and Elaina Erika Davis as Roxanne, share a...

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Ebon Moss-Bachrach, who plays Clifford, comforts Deborah Offner, playing his mom Terry, during rehearsal from the play Side Man at the San Jose Repertory Theater on Thursday morning.

Photo: Jeff Chiu, SFC

Ebon Moss-Bachrach, who plays Clifford, comforts Deborah Offner,...

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John Hansen as Cyrano drags, by the nose, Michael DeGood who plays Christian, to make a point in Act one. San Jose Repertory Theater with their production of "CYRANO".

Photo: Michael Macor, SFC

John Hansen as Cyrano drags, by the nose, Michael DeGood who plays...

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John Hansen as Cyrano has Michael DeGood who plays Christian, at sword point during the first scene of Act one. San Jose Repertory Theater with their production of "CYRANO".

Photo: Michael Macor, SFC

John Hansen as Cyrano has Michael DeGood who plays Christian, at...

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(Left to right): Kim Miyori, Lisa Li, and Sala Iwamatsu, as Grace, Chiz and Rose, in the San Jose Repertory Theater's production of, "The Sisters Matsumoto."

Photo: Carlos Avila Gonzalez, SFC

(Left to right): Kim Miyori, Lisa Li, and Sala Iwamatsu, as Grace,...

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Las Meninas is a play about the relationship between Queen Marie-Therese (wife of Louis XIV), played by Mercedes Herrero, and her African servant, Nabo Sensugali, played by Daniel Bryant. San Jose Repertory Theater.

Photo: Katy Raddatz, SFC

Las Meninas is a play about the relationship between Queen...

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Las Meninas is a play about the relationship between Queen Marie-Therese (wife of Louis XIV), played by Mercedes Herrero, and her African servant, Nabo Sensugali, played by Daniel Bryant. San Jose Repertory Theater.

For 34 years, San Jose Repertory Theatre has been entertaining audiences in Silicon Valley. On Wednesday, the venerable company announced that it has ceased operations and is filing for bankruptcy.

San Jose Rep is the latest prominent arts organization in the region to hit a wall, following San Francisco's Intersection for the Arts, which has furloughed half its staff and is trying to survive by developing new business and programming models. Shakespeare Santa Cruz was closed by UC Santa Cruz in September, but has resuscitated itself as the independent Santa Cruz Shakespeare and will open a two-play season July 5.

San Jose Rep is in many ways a more significant company, the flagship repertory theater of the Bay Area's largest city. Long financially troubled, it came close to closing in 2006, when then-interim managing director Nick Nichols and the board arranged a $2 million bailout line of credit with the city, later converted into a long-term loan, at a time when the company's budget was $5 million.

"We deeply regret having to take this action because of the impact it will have on our 51 employees, the artists we work with each season, our season ticket holders, loyal patrons and generous donors and supporters," said Holly Walter, president of the San Jose Rep's board of trustees. "We also regret the impact on the city of San Jose and the local arts community."

Fundraising concerns

The extent of the Bay Area's arts funding problem remains in question. The managing directors of American Conservatory Theater and Berkeley Repertory, the region's flagship companies, have said their companies have received unexpectedly high infusions of cash through subscriptions and single-ticket sales this season.

In the tech-rich South Bay, however, arts companies have encountered a more tight-fisted fundraising environment.

"Everybody looks at Silicon Valley and says, there's a lot of money there," San Jose Mayor Chuck Reed says. "But it's a tough place to raise it, because all of our companies are global, so they spend their philanthropy worldwide. The big bucks are not spent here at home."

Phil Santora, managing director of TheatreWorks, San Jose Rep's older and larger Silicon Valley neighbor, says, "While TheatreWorks is blessed with loyal supporters, it's not a secret that the performing arts field has been tested by shifts in philanthropy over the past few years from both private and public sectors. Traditional funding sources have indeed become more and more scarce while cost of living makes it harder to live and produce work in this area."

This concentration of badly troubled performing arts organizations in the South Bay - from the American Musical Theatre that closed in 2008 to the oft-troubled Ballet San Jose - would seem to indicate an overall fundraising problem in Silicon Valley.

San Jose Rep board Vice President Paul Resch, who works in tech, disagrees and points to other nonprofit sectors.

"The tech industry is richly interested in math and the sciences," he says. "There's been a concerted push for more arts support from that sector lately, but they're much more supportive of math and science."

New breed of philanthropist

Susan Medak, the managing director of Berkeley Rep, says, "There's no question that funding cultural organizations is so much harder now than it was a number of years ago because funding patterns have shifted.

"At the moment we're operating in an environment where many philanthropists want to use their money not to sustain programs but to effect change - and supporting culture is not perceived as being about effecting change."

San Jose Rep's closure leaves the South Bay with TheatreWorks - which stages its season in Mountain View and Palo Alto - as its lone major repertory company.

The closing also represents a severe loss of year-round employment opportunities for actors, directors and designers trying to cobble together a living in the expensive Bay Area.

San Jose Rep had produced a seven-play season each year, including world and West Coast premieres and co-productions with other major companies. In the spring it produced the world premiere of Berkeley Rep Artistic Director Tony Taccone and Dan Hoyle's "Game On." It was scheduled to open its 2014-15 season in late August with "The 12," a world premiere rock musical by playwright Robert Schenkkan, whose "All the Way" won the Tony Award for best play on Sunday and who'd previously received a Pulitzer for his "Kentucky Cycle."

Cash-flow crunch

"It was a cash-on-hand problem," says Resch of San Jose Rep's closing, echoing the reasons given for Intersection's fiscal crunch. "We simply ran out of sources for contributions, and we tried as many as we could. As with any professional theater company, ticket sales are never enough to pay for what we do and we have to rely on foundations, corporations and individual donors to make up the difference."

The cash-flow problem, he says, reached a tipping point when the company's annual spring gala "failed to raise as much as we had hoped." Resch didn't offer exact figures, but he said the money raised was "tens of thousands short" of expectations.

"I think it's a problem across the industry," he says, "with so many other things competing for people's attention. It used to be just film and TV. Now there is so much digital and online entertainment for people to choose from without having to leave the house and go somewhere."

Producing Artistic Director Rick Lombardo was in rehearsals for the American premiere of "Landscape With Weapon," by noted English playwright Joe Penhall, when the decision was reached. The actors were notified Sunday that the final production of the company's season, which was supposed to start previews June 19, had been canceled as of Monday.

"I am completely devastated by this," Lombardo said. "It is such a heartbreaking loss for the community. Saying goodbye to the actors I was directing, and then to our staff, were two of the most painful things I've had to do in my years in the theater."